What is a title?
A title is the evidence or right which a person has to the ownership and possession of land. A defect in that title can be any legal right held by someone other than the owner to claim property or to make demands on the owner of that property.
What is title insurance?A Title Insurance Policy insures that a new buyer will receive title to the real estate free and clear of all possible encumbrances, and that any and all liens that were in the seller's name(s) have been released. The policy insures that a new buyer will stand protected from a loss or damage as a result of title defects. Title insurance provides protection against forged documents, mistakes in public records, fraud and incorrect property descriptions, just to name a few. The title company will provide a thorough search of the public records to reveal possible liens, claims, or encumbrances against the real estate.
Why do I need title insurance?
Title
insurance is necessary to protect against those risks which are present
in all real estate transactions. Those risks are typically divided into
two main categories:
Hidden Hazards which cannot be detected in the examination
of title such as forgery, incompetency of grantor or mortgagor, fraud,
unknown heirs, impersonation, prior taxes or liens, just to name a few.
Human Error which will always be present.
The cost is directly related to the value of the property. The higher its value, the more coverage is needed. The premium is small compared to the total purchase price. The premium is paid only once and remains in force for as long as the property is owned by the insured and continues to protect the insured on warranties after it is sold.